The Wise Exit

Raleigh Williams - Episode 57 | CASHING OUT M&A PODCAST

00:00:00:07 - 00:00:18:01
Raleigh Williams
And so constantly keeping in mind why we were wanting to get out. And even though it wasn't the exact price that we wanted asset by asset like making sure that we like, we got the thing that we wanted without kind of like tripping over dollars to pick up pennies on deal points reps and warranties like all these stupid things that feel momentous in the moment and ultimately don't, don't matter that much and not let any of those things blow up a deal.

00:00:18:07 - 00:00:37:20
Todd Sullivan
Welcome to the Cashing Out podcast, where our fellow founders share real stories and offer honest advice around selling their companies to some of the top acquirers in the world. My name is Todd Sullivan, CEO of Exitwise, where we help business owners create the exits they deserve. Today, my guest is Raleigh Williams, a former M&A attorney turned entrepreneur.

00:00:38:03 - 00:01:02:18
Todd Sullivan
Raleigh quit his job as a lawyer to start an escape room business, which he quickly expanded into multiple locations while adding trampoline parks, axe throwing and other entertainment venues. After six years of running his company, Raleigh tried to sell the whole pool of entertainment businesses to a single buyer. But he quickly learned that the buyers and investment bankers believed he needed to sell his assets piecemeal to maximize his outcome.

00:01:03:06 - 00:01:33:03
Todd Sullivan
By separating each asset, Raleigh was able to create more than $26 million in enterprise value, which he now uses to invest in and buy other businesses. In our conversation, Raleigh shares why business owners should trust their intuition when deciding when to sell their companies, how to renegotiate business contracts to make them transferable in an acquisition. And when you're at the goal line, how you should focus on your why you are selling and not quibbling over every last dollar.

00:01:33:15 - 00:01:36:07
Todd Sullivan
I hope you enjoy my conversation with Raleigh Williams.

00:01:40:07 - 00:01:57:18
Todd Sullivan
Raleigh, thank you for being here. I'm really fired up to talk to you. We actually have a client that was a lawyer that decided I'm going to be an entrepreneur, goes out and buys a business. I think in your case, you started it and then you were able to exit that business. Who I think so interesting is you did it in stages.

00:01:57:18 - 00:02:16:08
Todd Sullivan
And I know there was some restructuring that had to happen to get that exit done. I think a lot of our founders are in a position where they're building a business and then all of a sudden they find they actually have two businesses actually maximize their outcome. They may need to split those businesses up and sell to different buyers.

00:02:16:09 - 00:02:29:09
Todd Sullivan
I think that was what we're going to learn from you today. So I am really fired up. I think there are a ton of lessons here, so much so that just so you know, Mark Cuban had this spot. And when I knew we got you, I got him immediately. So smart, wise man.

00:02:29:13 - 00:02:30:16
Raleigh Williams
Very, very wise move.

00:02:32:13 - 00:02:42:05
Todd Sullivan
Well, listen, why don't you go back as being a lawyer, an M&A attorney, right. No less, and then saying, I got to get out of this and own a business. Take us back to that.

00:02:42:09 - 00:03:00:04
Raleigh Williams
Yes, I'm the youngest of five kids. My dad was a lawyer, so I grew up kind of thinking that I always wanted to be a lawyer. I wasn't the entrepreneur selling rocks to my neighbors and selling candy bars out of my trunk in high school. I just I knew that I wanted to be a lawyer until I was a lawyer.

00:03:00:04 - 00:03:24:00
Raleigh Williams
And then I knew very quickly that I had no desire to be a lawyer. And I started in mergers and acquisitions, buying and selling companies. It was a group that did mergers and acquisitions and capital markets. So, I was like capital markets work and M&A work. And I just hated I couldn't the thing that I hated about it, the most was really that in law you can see what your path is going to look like five, seven, ten years in the future.

00:03:24:05 - 00:03:46:17
Raleigh Williams
The partner that's ten years ahead of you, like that's what your life will look like. And I just didn't I didn't see anybody there at some of the most prestigious law firms in the world that I was really like, I really want your life. And and so I quit nine months into practicing law and I started an escape room business of all things.

00:03:46:17 - 00:04:09:00
Raleigh Williams
And the only reason that I started an escape room business was because I read an article in MarketWatch that was called the Unbelievably Lucrative Business of Escape Rooms, and I did a little bit of research and I felt like it was a business that was simple enough that I could do with no knowledge or skills, which I did not have other than, you know, a couple of years at a good law school.

00:04:09:09 - 00:04:35:13
Raleigh Williams
And, and so that escape room business ultimately turned into my brother and I being in the escape room business, the trampoline park business, ax throwing. We kind of thought of ourselves as this like local entertainment conglomerate was kind of the thing that we thought that we were building. And then four years into it, we were kind of like, Let's see what the market looks like to just potentially get out of this business.

00:04:35:13 - 00:04:56:11
Raleigh Williams
Let's be done. And we went out, we talked to a couple of people that we thought had the capital to buy us. We were at that stage, we were probably doing to two and a half million dollars of EBITDA, but it was an escape rooms, trampoline, parks. We had all of these different locations with all these different partners and the few people that we felt like had enough money to buy us.

00:04:56:12 - 00:05:14:21
Raleigh Williams
All of them said that we were on purchasable basically, like your business is worth $0. We don't care how much EBITDA you have. Like it's too messy. It's you didn't build it in a clean way. Like we want to be in this business segment, but not this other business segment. And so, like, we don't value this at all.

00:05:14:21 - 00:05:43:17
Raleigh Williams
And so like there was no real path for us to get out in one fell swoop once there was no silver bullet buyer for us. And so then that started the path towards us, kind of deconstructing everything right down, trying to simplify the capital stock buying partners out and really segmenting the brands to escape rooms, trampoline parks, axe throwing, and then a bar that wasn't really making any money, shutting down segments that weren't working and really focusing on the things that were.

00:05:43:17 - 00:06:03:06
Raleigh Williams
And then ultimately in 2022, we we sold the businesses one off mostly to SBA buyers, and then the real estate was to different buyers of the real estate. And that ultimately led to like a $26 million exit amongst all of the exits that were required to do it. So it was it was a treacherous path.

00:06:04:00 - 00:06:24:03
Todd Sullivan
Hey, that's a great story. I guess the question for me is how did you go about finding out, right, that there wasn't a single buyer for all the different properties and locations bundled together? Was it just trial and error? Lots of calls. Did you have representation? How did you go about like entering the market and learning?

00:06:24:11 - 00:06:51:04
Raleigh Williams
We never had representation. There were big trampoline park operators and one or two big escape room operators that had private equity capital. We kind of felt like those were the only two groups that were interested and then kind of like a tertiary group was like bowling alley operators and like just family entertainment in general that would potentially want new exposure into trampoline parks and escape rooms.

00:06:51:15 - 00:07:29:16
Raleigh Williams
And so just talking to every CEO that had private equity money and any of those segments and they were all like basically just said no, yeah, they said that we weren't interested. And then I talked to an investment bank, I talked to three investment bankers to potentially get representation and they were pretty, pretty lukewarm on the idea of us being two of us having enough of the pieces to really be qualified as a platform acquisition for a group to come in and and then talking to business brokers, I was never super impressed with with what the options looked like.

00:07:30:05 - 00:07:51:22
Raleigh Williams
And so it was kind of a process of elimination of not feeling super excited about any of the potential avenues forward and not being massively impressed with anyone on that. You know, it's kind of like, Hey, pay us 100 grand, and then like we'll see what we can do. And was like, That doesn't sound massively appealing to me.

00:07:52:20 - 00:08:21:06
Todd Sullivan
Thanks. That's helpful. I think some of the the learning for me is that I've seen over the years is that, you know, an investment banker in your space, reaching out and finding those people and asking them, you know, what does it take in my industry to be able to, you know, create a transaction? And maybe what they were seeing is, yeah, there's lots of different locations, there's lots of different actual product offerings, and your EBITDA of two and a half maybe is not large enough to be a platform.

00:08:21:16 - 00:08:46:04
Todd Sullivan
And because you have multiple brands going on as a bolt on to a private equity platform, it's not an easy puzzle piece. Totally. So I think that's awesome advice or just encourage other founders. If you're thinking about the exit and your investment banker, the one that is really tied to your industry, should be able to give you that sense and then allow you to pivot like, like you pivoted or you pivoted in order to be able to sell.

00:08:46:09 - 00:09:04:11
Todd Sullivan
Can you talk a little bit about like, all right, so you get this feedback from the market, from bankers, from buyers, which is awesome that you reached out to everybody that way. And now you've got to kind of huddle up and determine what is the next what are the next moves that make us actually purchasable.

00:09:05:02 - 00:09:27:22
Raleigh Williams
Yeah, the the process for us and again, we had so many we ended up with four different brands and the partnership looked different in each of the brands. And really the partnership looked different amongst each of the locations within the brands. And so we really felt like the escape room business was the one that we wanted to get out of first.

00:09:28:07 - 00:09:55:04
Raleigh Williams
And so we just kind of started going like brand by brand and then location by location. So in the escape room business, I felt like we had two locations that made sense together that all fit within the state of Utah. And it was appealing for for an SBA buyer to come and by us and we packaged those together and so the escape room business was the first one that I put on the market on Biz Buy Sell.

00:09:55:04 - 00:10:26:00
Raleigh Williams
And I, you know, fielded my own calls and kind of dealt with the buyers myself and the adjusted panel with my accountants and just kind of ran through the process myself. And so the escape room business was the first transaction that we got done. And then once we found a buyer there and that happened in the midst of COVID, then we had another year that we really just had to hold tight and clear out our trailing 12 months P&L of like showing that we could right size post-COVID and then location by location.

00:10:26:08 - 00:10:48:12
Raleigh Williams
We started finding buyers and a lot of the buyers were people that were originally interested in the escape room business, but they didn't pull the trigger on it. So I'm like, Hey, I have a trampoline park business. Are you interested in that? And so just going location by location. One of them, the bar, we had a bar in downtown Salt Lake and that was like never really profitable, but we had a good option to purchase the real estate.

00:10:48:12 - 00:11:12:21
Raleigh Williams
So I didn't actually sell that business. I just sold like the real estate option to someone who bought it. And basically we broke even on that deal. And, and then we had in some of the locations we had purchased the real estate and we learned that, you know, it was a $12 million building and a real estate purchaser that has no interest in being in entertainment was just the highest and best bidder.

00:11:12:21 - 00:11:24:19
Raleigh Williams
So we just kind of like went down the line of like, what's the most liquefiable thing that we want to get out of? And let's just start going and let's start start working through it. And then we just started knocking them out one by one.

00:11:25:10 - 00:11:35:03
Todd Sullivan
Good for you. I'm interested in the idea, right, that as individual entities, did you maximize the value? Right? I think you said $22 million. It was was $26.

00:11:35:03 - 00:11:36:18
Raleigh Williams
$26.

00:11:37:01 - 00:11:46:01
Todd Sullivan
And even if you're kind of structures were complete and you were presented it, the whole business, the entertainment business is Williams entertainment. Is that what it was?

00:11:46:01 - 00:11:47:00
Raleigh Williams
Claims entertainment. Yeah.

00:11:47:09 - 00:12:05:15
Todd Sullivan
Yeah. And presented that to a market right. With the right banker. Would you have received, you know that that kind of outcome. I think it's pretty interesting to be able to take money off the table in different stages, right? Because that probably enabled what you could do with the next business and how you align that, getting it ready for market, it's awesome.

00:12:05:15 - 00:12:25:19
Todd Sullivan
I mean, we haven't really heard that kind of story today and you're clearly, really successful. Can we talk a little bit about the actual trends actions? Because I think a lot of the learnings from, you know, from our podcasts are about M&A and you have being an M&A attorney, you probably have a different lens that you looked through for each one of those.

00:12:26:03 - 00:12:34:15
Todd Sullivan
Maybe you could tell us what was kind of the best thing that you did and maybe the mistake that you made each time you went to sell or just advice in general?

00:12:35:14 - 00:13:15:19
Raleigh Williams
Yeah, I think that's a good question. I think the best thing that I did was I was very adamant about getting these deals done and kind of like losing the battle to win the war. And because I, I navigated this with a lot of different partners, I was always kind of the point person in dealing with the purchase and sale agreement and what negotiations were and whether it was a net working capital issue or a seller financing issue or whatever, whatever, whatever, whatever the issue was, there would always be some partner that really wanted to die on a hill.

00:13:15:19 - 00:13:40:11
Raleigh Williams
And, you know, when the negotiation and kind of these Pyrrhic victories present themselves all over the place where you get these people that have had success in other parts of business and they don't want to lose any point of the deal. And I think probably the best thing that I did was just I was always willing to look like I was losing on a deal point to make sure that the deal got done.

00:13:40:11 - 00:14:04:16
Raleigh Williams
An example of this is in the first transaction that we did, we went under contract in November and he needed his tax returns to be finished in order to complete the SBA deal. So we really couldn't close until April 1st and end the time from November of 2019 to April 1st of 2020. COVID started right before we started March 15th of 2020, So two weeks before we were supposed to close.

00:14:05:01 - 00:14:32:19
Raleigh Williams
And so the buyers wanted a like a purchase price reduction of going from $1.7M to $1.5M. You know, they wanted a $200,000 haircut because the location was closed and there were all these things that we were trying to navigate to make sure that we were complying with the SBA in order to get the deal done. And I had partners that were like, you know, it doesn't feel great to feel like you're getting retreated on a deal even though you have.

00:14:33:00 - 00:14:56:20
Raleigh Williams
And it was two weeks into COVID. So like, obviously our position was COVID is not going to be a big deal. They're going to open this back up immediately, whatever. And their position is the cash flow has gone to zero. How do we know how we can do this? And despite the fact that they were reiterating the deal and it didn't feel great, I was just adamant that I wanted to be out of this asset immediately.

00:14:57:02 - 00:15:32:14
Raleigh Williams
Yeah, Yeah. And so we made sure that the deal got done and basically, like ripped up the seller note that we had had had for $200,000. And just like I think finding win wins and not walking away from the table and kind of letting cooler heads prevail throughout the process to make sure because we were getting out, because we felt like the entertainment market was saturating, was changing and we wanted to not be exposed to the entertainment market anymore.

00:15:32:14 - 00:15:56:19
Raleigh Williams
And COVID really demonstrated that our fear was directionally correct, that, you know, it was a different market than the market that we had originally entered into. And it was only going to get more and more competitive and harder and harder to compete with insurance. You know, they're just they're all these market factors that we no longer wanted exposure to and we wanted to get out before the panel started showing that the market had materially changed.

00:15:57:09 - 00:16:34:06
Raleigh Williams
And so we wanted somebody with new blood, new energy to come in and do it. And we didn't want earnout, you know, we just didn't want any exposure to the market anymore. And so constantly keeping in mind why we were wanting to get out and even though it wasn't the exact price that we wanted asset by asset, like making sure that we like, we got the thing that we wanted without kind of like tripping over dollars to pick up pennies on deal points reps and warranties, like all these stupid things that feel momentous in the moment and know ultimately don't, don't matter that much and not let any of those things blow up the deal.

00:16:35:08 - 00:17:01:23
Todd Sullivan
Raleigh, it's awesome advice you know even one of our last guests had talked about one of their top three pieces of advice is get your deal done. But I think what you've gone and talked about is this translation of emotion to finance throughout an entire transaction process. Right? It takes months and every little deal point feels like it's the biggest thing when if you keep the why, why are you selling in mind?

00:17:02:07 - 00:17:25:06
Todd Sullivan
It really makes a difference whether you want to go start a business with your kid, you want to retire, you have a health issue, or in your case, right, you don't want to exposure anymore exposure to a particular industry. If you're keeping that in mind, you get your deal done. So many of them fall apart really for the wrong reasons, and then people are left holding the bag on something that they really didn't want because they weren't willing to give up a couple hundred grand.

00:17:25:17 - 00:17:42:23
Todd Sullivan
And in the big scheme of things, what I also see is it's not only getting your deal done, but the options that are now created with that new time that you have, in your case, your focus on selling more things. But for a lot of people, it's okay. Now I get to go buy a business I really want or I get to travel.

00:17:43:02 - 00:18:00:11
Todd Sullivan
As long as they have that piece kind of figured out. What we found is people do a better job of not worrying about the littlest points or fighting for pennies. So just an emotional state. It sounds like you played a really important role on your team to kind of level set and remind people why you're doing what you're doing.

00:18:00:17 - 00:18:32:20
Todd Sullivan
So thanks for sharing that. We face that issue, that translation of emotion to finance on every single transaction. We're constantly reminding people why, why you're doing this, if you've if you've made your mind to do it. So that's a huge one. Is there anything else as you go down and start selling additional assets, different locations, restructuring, is there anything around actually that restructuring, because it sounds like that had to be pretty problematic with different partners and probably different equity stakes, different responsibilities on each asset?

00:18:34:09 - 00:19:04:03
Raleigh Williams
Yeah, like it was obvious that over time the operating agreements that we had, the, the, the earlier locations had pretty insofar short operating agreements and procedures for us to be able to liquidate and really like all phases of it, like our leases with our landlords, we didn't like really focus that much on like the assign ability of the lease and how we can get out of it without landlord approval and all of these things that come up in a transaction.

00:19:04:03 - 00:19:23:00
Raleigh Williams
And then as I got more and more involved on the legal like operating agreements with drag alongs and Tagalongs are just things that you're not thinking about when you're like, Hey, we should do anything that's not practicing law, that's an escape from business. Who cares what the operating agreement says to, Yeah, how do we get how do we unwind this if we need to?

00:19:23:00 - 00:19:45:18
Raleigh Williams
How do we buy people out? How can we force a transaction even if partners don't want to do the transaction? And so the older operating agreements and the older leases and the older service level agreements that we had with our vendors were all pretty sticky and hard to deal with. And, you know, we would have to go say, Mother, may I to landlords in order to allow us to transfer it.

00:19:45:18 - 00:20:14:07
Raleigh Williams
And over time I would have never signed agreements anymore. I wouldn't I would've never signed a lease anymore without like assignability because it's something that a landlord typically won't blow a lease deal up over. But if it's not there in the lease at the very beginning of the transaction, but one's already in the space and you're paying rent and like you're locked in like going back to them to get that provision, you know, it just opens up a leverage point.

00:20:14:07 - 00:20:36:14
Raleigh Williams
And so like we started to eliminate leverage points that other that outside parties could hold against us in the event of a transaction. And so we got wiser doing that, adding locations over time. But the earlier deals were messy and kind of three dimensional chess dealing with all of the people that wanted capital. You know.

00:20:37:12 - 00:21:05:06
Todd Sullivan
I think that is another great one. I know with the businesses that I've sold, I've had to go back and look at contracts and renegotiate certain points to make the business sellable. We actually just sold a business on Friday that had a ton of license agreements and licensing agreements with the NFL, the NHL, the Major League Baseball, Disney, all of these big licensors and some are transferable and some are not.

00:21:05:06 - 00:21:24:02
Todd Sullivan
Some require permission. And when you're when you're a start up business or you're just trying to get going, you don't think too much about that. You just sign and you go. But now, you know, somebody comes in and they need to really understand the value of those assets. And if they can go away, then, you know, that risk is gets gets applied to the purchase price.

00:21:24:11 - 00:21:39:22
Todd Sullivan
So I think you're talking more on the real estate side. But but as advice, it's phenomenal to really understand the contracts and think about transfer ability. It's super important. So thank you for that one. Anything else you've given us? Kind of two pretty big nuggets here.

00:21:39:22 - 00:21:59:05
Raleigh Williams
I think once you for me it was always helpful. Once we got the first deal done, which was in 2020. Yeah. Just having those things on the radar, like knowing that you have a potential issue with your landlord when they come and ask for an amendment or renewal that they need to be compliant with their lender or whatever.

00:21:59:16 - 00:22:30:16
Raleigh Williams
Just knowing kind of what your laundry list of things are that you need to clean up, help you. Like we had a couple of landlords that we would sign a new amendment, be like, Oh, we actually like need this to be transferred. It's so much easier to have those conversations outside of the context of, Hey, closing is in seven days and like, yeah, I need because once you need from a partner or a landlord or whatever, you just open yourself up so much to like, Oh, there's a transaction happening like, tell me about it, how much are you making?

00:22:30:16 - 00:22:47:18
Raleigh Williams
And yeah, what can I make? How much is this amendment worth to you? And just starting those conversation, basically having that on your radar earlier, because when it's when you can do it outside of the context of a transaction, usually you can get a lot better terms on those things than otherwise.

00:22:48:06 - 00:23:06:01
Todd Sullivan
Raleigh, That's great because I know a lot of licensing agreements themselves need renewals, right? A lot of contracts are going to have a renewal phase. So if you've made the laundry list of things that you know need to get changed in order to it to do a transaction down the road, that's just great housekeeping and a great time to negotiate it, right?

00:23:06:01 - 00:23:28:11
Todd Sullivan
There's a little give and take rather than, you know, your hat in hand, just hoping it goes your way. That's fantastic. So what I think is really interesting is the lessons that you've learned in selling your business. Now you've jumped into a business where you're helping people who come to you and say, Hey, I've got this thing I might be interested in selling in the next, what, two, three years?

00:23:28:11 - 00:23:33:16
Todd Sullivan
Yeah. And you're helping now position them for exit. Can you talk a little bit about what you're doing today?

00:23:34:13 - 00:24:01:06
Raleigh Williams
Yes, a deal maven is kind of the brand that we use to help people that are what I noticed when I was in my business running it. And I remember the day that I really knew that I wanted to sell because I had a CEO that was the operator of all of these locations. And he called me and I would talk to him, I would talk to him daily, multiple times a day.

00:24:01:13 - 00:24:34:01
Raleigh Williams
And it was the first call that I saw his name come up on my phone and I was like, Shit, I do not want to talk to you. Yeah, like I'm done like, I don't care what you have to say, Like you need to like it was just like and there's so much social media content, whatever around like do what you're passionate about and like, you know, you'll never have to like it was just like I could tell that the passion and the drive for me to grow this thing and put this business on my back to get it to the next level that I was just like, done, I was ready to be over

00:24:34:01 - 00:25:01:04
Raleigh Williams
it. And that felt like a very lonely thing to me because I wanted to start thinking about myself in my own economics more than I cared about the economics of the business and it was hard for me to be in meetings and talk about like the next location, the next location, the next location, when I knew that, like my heart wasn't in it anymore and I didn't know why I wasn't really pulled massively in a different direction.

00:25:01:04 - 00:25:25:04
Raleigh Williams
I just knew that I didn't want to do it anymore. Like I just like, reached my max. So when they make the decision that they want to sell, there aren't a lot of people that can help them because, you know, they're scared about employees finding out and employees quitting. And, you know, a lot of people, they're recruiting. They want to be on this boat with the founder who's pushing forward and like going on this crusade with them.

00:25:25:04 - 00:25:46:09
Raleigh Williams
And once the founder's like, hey, I want the crusade to keep happening, but like, I'm staying home because like, y'all, it's just a weird transition that a lot of founders only go through once. And so Deal Maven exists to kind of help them when they're in that moment of, Oh, I think I like want to start looking outside of this business for what my next thing is.

00:25:46:19 - 00:26:12:00
Raleigh Williams
Hmm. What do I need to focus on to to just make the most amount of money possible when I want to sell this, if I want to sell this. And so we come in, look at their business, and say, Here are the biggest drags to value. Typically it's an under built team making sure that like growth rate is happening within the business that like the product mix makes sense.

00:26:12:00 - 00:26:31:17
Raleigh Williams
And I know this because I built a poor product mix in my business of having all of these things that, you know, like some people will have like a service agency and then like running like a paid community to the side for the founder. And they're like, you know, it's just messy in the way that they're trying to build it and they're not building towards terminal event.

00:26:32:05 - 00:26:53:18
Raleigh Williams
And so we come in to kind of be that sounding board and that partner that kind of helps them like standardize and really understand what they need to be building towards. And sometimes we'll do that in a consulting capacity. Sometimes we'll invest ourselves and kind of jump in the boat with them financially and help them run that play.

00:26:53:19 - 00:27:11:12
Raleigh Williams
However we think it best can be run all with the idea of focusing on the asset value of the business. So that way if they do want to sell that, they can and sometimes they decide, Oh, I've finally fixed all the things that I hated in the business, I don't want to sell. And that's why we don't, you know, we're not at the transaction level.

00:27:11:12 - 00:27:33:09
Raleigh Williams
We're not incentivized to force them into a transaction if that's not what they want to do. And so anyway, that's what Deal Maven is. And, and it's it's the part of the founder journey that I enjoy the most when they're like they just are unsure or they finally built a plane that's flying and now that it's flying, they want to land it and there's no landing gears in place.

00:27:33:09 - 00:27:35:02
Raleigh Williams
And so how do how do you do that?

00:27:36:10 - 00:28:03:12
Todd Sullivan
So I love the service we have on our website, a valuation calculator where somebody can input all of kind of their financial metrics, but then they can evaluate their business based on customer concentration and strength of management team and reliance on suppliers. And it just goes down and down and down. And what it ends up doing right is it tells you what is making your business strong and valuable to somebody else.

00:28:03:17 - 00:28:20:11
Todd Sullivan
And where are the parts that are weak? What we don't do, and I think this is a chance to really work together, really is to be able to actually make those changes, because sometimes you've gone down in a direction just because that's all you know, and somebody could tell you, hey, the baby's ugly, but you don't know how to make it beautiful.

00:28:20:18 - 00:28:47:21
Todd Sullivan
And so somebody like you who can jump in and really even take an equity stake right, take some ownership and turn that business and turn a business that could be worth, you know, 50 and into 30, 45, a couple of years down the road. Those two years of effort adjustment are critical to delivering the highest ROI. So we're going to talk more about that because I think you could help a lot of our founders who are thinking we're in the same situation as you.

00:28:47:21 - 00:29:07:02
Todd Sullivan
Right. And and the value just isn't quite there. And if you look at them, they're boy, we'd really be doing a lot of people service. You know, what's also to me really exciting is and I want people to understand is once you sell a business kind of the world opens up a little bit. Not only do you have time, but you're so much more knowledgeable.

00:29:07:02 - 00:29:24:22
Todd Sullivan
So you go out and start this other business and it's really your sense of giving back. You're adding tons of value, but you're also buying companies now, right? So you still you've got an entrepreneurial business that you run and then you've got a portfolio company of companies that you're buying because of the liquidity you created, but also the new passion.

00:29:24:22 - 00:29:30:05
Todd Sullivan
Can you talk about that portfolio and how you think about, you know, monetizing that in the future?

00:29:30:14 - 00:29:50:08
Raleigh Williams
Yeah. And and I think the thread there, like I've looked back when I did my entertainment business, the only need that I was trying to solve was my financial security. I didn't care about escape rooms at all. I was just like, this is a way for me to make money that's better than practicing law. And that was my only criteria.

00:29:50:08 - 00:30:18:06
Raleigh Williams
And it check that box for me. And then with enough time and reflection and not being in the grind so much, I was able to think about and I don't this isn't a silver bullet answer, but like I at least start considering what is my unique contribution outside of just like providing for my family with a roof over my head, like how do I want to contribute and what my unique skill set that I feel like I can contribute back to humankind, whatever.

00:30:18:21 - 00:30:40:20
Raleigh Williams
And so for for me, I really enjoy helping the entrepreneur go through the phase of transitioning from like, I'm so passion driven about this to I kind of want to do something else, and that that shifts the business in a way that is difficult. And some businesses can't survive that shift of a founder that's putting it totally on its back.

00:30:41:04 - 00:31:03:15
Raleigh Williams
And so those are the companies that I invest in. They've been one of them, as is like a health semaglutide business with with a founder that it's like a weight loss business. One of them is a pharmacy. One of them is is a software company that buys it's like a marketplace for Facebook groups and like social media accounts.

00:31:04:01 - 00:31:33:03
Raleigh Williams
And so I a lot of times they're coming to deal may been wanting help potentially selling or not sure what they're wanting to do and then if I like the business enough and really liking the business plus the founder and like knowing that the founder has enough juice in the tank to really stay in the boat for another couple of years to get everything fixed that needs to get fixed, then we'll invest in it and usually take like, you know, I'm always like right at the majority.

00:31:33:03 - 00:31:56:14
Raleigh Williams
Typically I'll buy, you know, 50, 51% if I'm really needed to take on the operational controls of the business and for me, the game is making sure that the founder is incentivized enough in the second transaction to stay on and to really focus on it. And I don't care. I don't care if we sell it. I don't care if it turns into something that we hold for the next 20 years.

00:31:56:15 - 00:32:30:02
Raleigh Williams
You know, I don't have a fund or like I don't have any expectation of return capital LP's on any expedited timeline. And so that's been I feel like it's been closer. When I was running the escape room, the entertainment business, I kind of defaulted to the accidental CEO where I was. I was kind of required to do things that I wasn't best suited, like me running SOPs and running financial controls in a business and being hyper detailed about, you know, the nuances of operations was never my strong suit.

00:32:30:02 - 00:32:47:13
Raleigh Williams
I just like kind of powered my way through it with enough caffeine. All things are possible. And and so this allows me to kind of stay in my lane more and not take on hats that I'm not best suited to do. And so it's been and it wouldn't be possible without me having sold the business that I sold.

00:32:49:00 - 00:33:10:21
Todd Sullivan
Absolutely right. Where the fact that you went through starting a business, operating, growing and selling is a ton of credibility for what you're doing. Buying companies. But I think what's also magic magic is that you're not only money for these guys, right? You've got Deal Maven in the background really, which is this is a strategy to create a far better outcome down the road.

00:33:11:05 - 00:33:26:06
Todd Sullivan
So you've got a bit of a roadmap to creating that second bite of the apple for that owner. So I'm sure you guys have to get aligned whether you want a transaction in the next two years or the next 20 years. Right. But if you're aligned there, it sounds like you bring a lot more to the table than just money.

00:33:26:06 - 00:33:47:06
Todd Sullivan
I think it's fantastic. Yeah, I'd love to learn more about that playbook. We see a lot of businesses that are not necessarily ready to be sold, but could really be helped with that kind of operational mentorship and maybe other resources, financial resources to continue to grow. They could have much better exits. So we'll absolutely have to continue this conversation.

00:33:47:13 - 00:34:05:16
Todd Sullivan
Look, I want to be respectful of your time. Is there any other pieces of advice? I mean, you've given us just really some great ones of just kind of getting that deal done through the emotion and emotion to finance translation for your team? You just you've given us a lot. Can you think of anything else that you'd want to share?

00:34:06:06 - 00:34:26:00
Raleigh Williams
I think the like when you're a founder running a business, it's a super lonely path because there's no real person who has enough context to really tell you what the best thing to do as well. You should hold it, keep it, sell it is now the right time. Should you wait for another five years? I think the interesting part about my story was I got adamant about selling and I didn't.

00:34:26:20 - 00:34:57:22
Raleigh Williams
I found cogent enough reasons to convince my partners that now is a good time to sell. But I didn't really have. I just knew that I wanted out and I didn't know why in a like a super clear way. And after I sold, you know, I was running that business for a while and I was working 70, 80 hour weeks, trying to grow locations, trying to build the empire, whatever analogy you get sold on, on why you're doing what you're doing and I was working an insane amount of time.

00:34:58:09 - 00:35:15:13
Raleigh Williams
I decided to sell. Everyone told me that it was a bad idea that I should hold it or like turn it into a holdco. You know, everyone's got all their reasons why. Why you shouldn't do what you want to do. I decided that I wanted to do it after I sold. Six months later, my wife gets diagnosed with stage three breast cancer.

00:35:15:15 - 00:35:39:23
Raleigh Williams
We have a nine year old, two five year old kids and the I needed to be home much more than I ever had been. And I never would have imagined in my wildest dreams that that would be the reason. So the piece of advice is if your intuition is telling you it's time to move on to something else, stick to that intuition and let that intuition guide you.

00:35:40:09 - 00:35:59:22
Raleigh Williams
And if that intuition tells you that the couple hundred grand isn't worth quibbling over, like it feels like it may within the transaction, like stay with that, stay true to it. And the entrepreneur allows the business that they're running to take over more of their life than it probably should. And and we justify it for a long time why we need it.

00:36:00:05 - 00:36:36:03
Raleigh Williams
And and then whenever it comes time where you start feeling now like this has taken enough and it's time, it's time to reshuffle the deck and reprioritize the focus, allow that to guide you through it all the way, even if you know the economics or even if every deal point doesn't turn out exactly how you'd like it to be, because I think on a long enough time horizon, you'll find that like, you know, there are more important things than a couple hundred grand and like, you know, you'll be directed towards the next thing that will that'll be important.

00:36:36:03 - 00:36:43:23
Raleigh Williams
And that's just been my story. And that's that's been it's been an interesting thing that I could have never I couldn't have written the script for it if I tried.

00:36:44:10 - 00:36:49:22
Todd Sullivan
Thank you for sharing that rally. I hope everything turned out well for your family. Yeah.

00:36:50:02 - 00:37:11:19
Raleigh Williams
Yeah, she yeah, I mean, 18 months of hell and, breast cancer, chemotherapy, mastectomies. And so it's like it's an event that changed us permanently. You know, there's no going back to pre-cancerous times. But yeah, everything turned out turned out okay. And I couldn't have done it had I been operating the company that I was operating alongside of it.

00:37:11:19 - 00:37:13:04
Raleigh Williams
It just would have been impossible.

00:37:13:13 - 00:37:34:19
Todd Sullivan
It's an amazing story, that idea of intuition. I know so many founders come to us daily and they have a reason. And whether it's the real reason or not, they've got a reason for selling. And we spend a lot of time trying to understand really what is their why and is it meaningful enough and to actually go through with a transaction.

00:37:35:02 - 00:37:54:05
Todd Sullivan
I think, you know, a lot of times it comes down to what are you going to do after that transaction? And you clearly knew you were going to you're going to continue to give back to the entrepreneurial community. I think you probably learned, right, that buying businesses might be the better way to go looking at different industries. But you got so much smarter.

00:37:54:05 - 00:38:12:15
Todd Sullivan
I think that's the thing that is been my experience is I built and sold for businesses and every time you get a little bit better, it gets a little more exciting. The next one gets better and better and better. And so I just encourage people to find that y and stick to it just like you did, even if it is if it's your intuition telling you to do it.

00:38:13:06 - 00:38:29:20
Todd Sullivan
Raleigh Thank you so much for this. These are really kind of powerful pieces of advice. I think people got a lot out of this one. But yeah, just really appreciate your time. I'd love to ask this one question. You know, is there anyone in your life that you would like to thank for your personal and professional success?

00:38:30:18 - 00:39:01:19
Raleigh Williams
I mean, I guess the trite answer is my wife and I like that's that's great. And it's true that it wouldn't have been I think, when I wanted to quit practicing law. And so, you know, as a 26 year old making $180,000 a year to go from 180 grand to zero is scary for anyone. And she was you know, she always gave me nothing but her full throated approval of taking that risk.

00:39:02:03 - 00:39:25:19
Raleigh Williams
And and I think the the other person that really helped at the very beginning of the process was a mentor that I had in Dallas, a guy named Steve Cohen, who helped, you know, when you're when you're that age 26 and really thinking about throwing away a legal career that feels it feels like a death of a dream that I had had for a while.

00:39:26:04 - 00:39:49:04
Raleigh Williams
And I think he was very wealthy. And, you know, I if you look at my Twitter or my LinkedIn or whatever, like a lot of quotes that I have or his words like only do deals that if you're right, you get rich. And if you're wrong, you don't go broke like, you know, he has he had a lot of good advice, kind of keeping perspective of like, hey, in the grand scheme of things, practicing law really sucks.

00:39:49:04 - 00:40:10:00
Raleigh Williams
So like, you're not you're not you're not losing that much by not being a lawyer. And it was it was super helpful to kind of those were the I think those were the two core people that like, really believed in me and the way that I needed to and the way that I needed to be believed in in order to take the initial initial risk and kind of kickstart everything that happened after that.

00:40:11:03 - 00:40:15:01
Todd Sullivan
Raleigh. Thanks. That's that's absolutely perfect. I really appreciate it. Thanks for being here.

00:40:15:17 - 00:40:17:03
Raleigh Williams
Hey, thanks for having me. It's great to do it.

00:40:18:05 - 00:40:40:08
Todd Sullivan
Thanks again for listening to the Cashing Out podcast. For more founder exit stories, please subscribe to the Cashing Out podcast on Apple, iTunes, Spotify, or wherever you listen to your favorite podcast source. And please remember Exit wise dot com and the Cashing Out podcast are for entertainment purposes only. This should not be relied upon as the basis for investment decisions.